| By Gavin Chait,
on 25 November 2006
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Easter Island, in the Pacific Ocean, has long been a pet trophy for both environmentalists and anti-capitalists. This remote island is denuded of vegetation and features artefacts pointing to a rich cultural heritage, as well as a collapsed society. The first European visitors discovered a forlorn rock where agriculture and deforestation had destroyed the environment and depleted food resources so badly that the island could no longer support its population. "Exactly," goes the common thinking, "this is precisely why we shouldn’t be capitalists and simply exploit our environment - otherwise we’ll all wind up dead." In reality, Easter has a more sombre lesson. Capitalism works, and socialism will kill you. When any good has a fixed (or, worse, no) value then its availability bears no relation to its price. The feudal system of the islanders held all assets in common. Trees had no cost. Cut down one tree, cut down a hundred trees; the only cost is in the effort required to do so. As the number of trees declined there was no way to encourage sustainable use of those trees. Legislating that people look after trees makes no difference. If the trees had traded on the open market then, as the trees became scarcer, then the price would have skyrocketed. The high price would have encouraged the pursuit of substitutes. The same is true of the oil industry. Oil is not held in common. It is freely traded. As the perception of the difficulty of getting it, or of its scarcity, increases, so too does the price. Oil cannot run out. It will become too expensive to buy long before the supply ends. And that will encourage us to look for cheaper alternatives.
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